The Court of Tax Appeals (CTA) has invalidated the hastily done P95 million tax collection notice sent by the Bureau of Internal Revenue to a popular chicken restaurant in Quezon City.
In upholding the decision of its Third Division, the CTA en banc said the Max‘s Restaurant branch in Sta. Mesa was not given enough time to answer the Preliminary Assessment Notice (PAN) before it received the Formal Letter of Demand (FLD)
The resolution written by Associate Justice Jean Marie Bacorro-Villena explained that a taxpayer has 15 working days upon receipt of the PAN to reply pursuant to Section 228 of the Tax Code and Revenue Regulations 12-99.
Records showed that Max’s received the FLD on January 21, 2013, the last day it was supposed to answer the PAN.
“The Quezon City Revenue Region did not wait for the expiration of the PAN before sending the demand letter,” the decision stated.
It stressed that the period of reply is an ordained procedure to give taxpayers the chance to explain, or rebut the findings of the PAN.
It noted that the mailing of the FLD fall short of the standards laid down by the Supreme Court in the case between the BIR and Avon Products Manufacturing.
The alleged deficiency taxes of the eatery covered income and value-added taxes, plus compromise penalties for the year 2009.